Financial Crisis Was Avoidable, Inquiry Finds

[Strike For The South]

http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html?_r=2&nl=todaysheadlines&adxnnl=1&emc=tha2&adxnnlx=1296055005-Y/E2GAMdEEw9UeeKke+GVQ



The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve (http://topics.nytimes.com/top/reference/timestopics/organizations/f/federal_reserve_system/index.html?inline=nyt-org) and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.


But why enforce laws when someone is making profit. Profit can only help us!

Granted Fannie and Freddie stupidly bought these same securites to help spur the bubble when it was showing signs of faltering but I guess we can't hope for our government to regulate only to be corporate Americas lap dog

[gaelic cowboy]

But but markets are efficient and know best (http://www.irishtimes.com/newspaper/ireland/2010/0331/1224267400149.html)

[rory_20_uk]

WW2 was also probably avoidable, as was WW1, the creation of North Korea...


Isn't hindsight great?

~:smoking:

[Louis VI the Fat]

WW2 was also probably avoidable, as was WW1, the creation of North Korea...


Isn't hindsight great?

~:smoking:That's exactly what I said too, when they put me on trial for blowing up that gas station: 'Yes, with the benefit of hindsight it is easy to see that me dropping that burning cigarette into that perfectly visible gasoline spill I was making because I was too drunk to aim properly would create a disaster. But that's easy hindsight, isn't it?'


Or, the 'avoidability' of the inquiry is based on commonly accepted notions of direct causality and responsibility.

[Louis VI the Fat]

Paul Krugman offers some thoughts about the crisis, including a scathing comparison with that other crisis which was perfectly avoidable and not at all a matter of unforeseen mystical forces, the current one in Ireland. Similar to the crisis in America in 2008, the main culprit is deregulation.

Note the delightful irony of Ireland on the eve of its collapse having been the golden boy of the deregulation champions, claiming first place in their most dangerous and Orwelllian named ranking of 'Economic Freedom':

On the eve of the financial crisis, conservatives had nothing but praise for Ireland, a low-tax, low-spending country by European standards. The Heritage Foundation’s Index of Economic Freedom ranked it above every other Western nation. In 2006, George Osborne, now Britain’s chancellor of the Exchequer, declared Ireland “a shining example of the art of the possible in long-term economic policy making.” And the truth was that in 2006-2007 Ireland was running a budget surplus, and had one of the lowest debt levels in the advanced world.

So what went wrong? The answer is: out-of-control banks; Irish banks ran wild during the good years, creating a huge property bubble. When the bubble burst, revenue collapsed, causing the deficit to surge, while public debt exploded because the government ended up taking over bank debts. And harsh spending cuts, while they have led to huge job losses, have failed to restore confidence.

The lesson of the Irish debacle, then, is very nearly the opposite of what Mr. Ryan would have us believe. It doesn’t say “cut spending now, or bad things will happen”; it says that balanced budgets won’t protect you from crisis if you don’t effectively regulate your banks — a point made in the newly released report of the Financial Crisis Inquiry Commission, which concludes that “30 years of deregulation and reliance on self-regulation” helped create our own catastrophe. Have I mentioned that Republicans are doing everything they can to undermine financial reform?

http://www.nytimes.com/2011/01/28/opinion/28krugman.html?_r=1&adxnnl=1&ref=homepage&src=me&adxnnlx=1296318170-pc5ssToqK3PvgigdJI0BFw

[a completely inoffensive name]

Ireland, Texas and the financial crisis are all examples of how we have deregulated too much the past 10 years (all this you could argue was warned about when Enron's scandal broke out with minimum repercussions on financial regulation).

I don't see why people are resistant to government intervention when it is obvious that what is occurring is not government intervention ruining the free market, but the reluctance to even guard the public against things we all agree are bad like fraud.

Why did this crisis occur? Because people were passing off loans as something there were clearly not and attempted to cover up that fact. That is fraud in my book. Tell me why less government would have stopped that from happening.